CW Update 26-05: Implementation of New Income and Resource Exemptions Per Assembly Bill (AB) 42

CalWORKs Handbook

Date References Clerical Implementation
04/21/26 ACL 26-16 N/A 03/01/26

Background

Under the previous law, only federal or state government-funded grants, awards, scholarships, loans, and fellowships awarded for the purposes of attending a higher education institution were exempt from consideration as income for CalWORKs.

This required Social Services Benefits Specialists (SSBSs) to evaluate the source of education-related income to determine whether to exempt it or count it when determining eligibility and benefit amounts.

Changes

Effective March 1, 2026, AB 42 exempts all grants, awards, scholarships, loans, and fellowships awarded for the purpose of attending a higher education institution from consideration as income for CalWORKs. When the Assistance Unit (AU) retains this income, it is also exempt as a resource for 12 months.

Important: Cash payments from friends or relatives made directly to the AU member for this purpose are still counted as income.

The following CalWORKs Handbook topics have been revised:

The following CalWORKs Handbook topic has been removed:

  • Chapter 29 Unearned Income: Student Income.

Implementation

For new applicants, these policy changes apply to applications received on or after March 1, 2026.

For current recipient families, the SSBS must re-evaluate eligibility and benefit calculations at the family’s next Semi-Annual Report (SAR 7) or annual redetermination (RD) after March 1, 2026.

Note: Current recipient families also have the option to make a voluntary mid-period request to have benefits recalculated with the relevant income exclusion, if applicable.

Data Systems

CalSAWS System Change Request (SCR) CA-297632: ACL 26-16 - AB 42 Exempt Grants, Awards, Scholarships, and/or Loans for CalWORKs and CalFresh is tentatively scheduled for CalSAWS Release 26.09 (targeted for September 21, 2026).

Until SCR CA-297632 is implemented, the SSBS must follow System Announcement 412: 'Awards/Scholarships' and 'Student Grants, Loans - Non-Needs Based' Income should be exempt for CalWORKs, CalFresh, and Refugee Cash Assistance.

Listings

A listing will be provided for cases requiring the workaround above. The SSBS must re-evaluate these cases retroactively and issue supplements as appropriate.

Other Programs

This update also applies to CalFresh (CF), Refugee Cash Assistance (RCA), Entrant Cash Assistance (ECA), and the Trafficking and Crime Victim Assistance Program (TCVAP).

 

Department of Employment & Benefits Services

Contact Person(s): Vivien Phan, SSA Business Policy Implementation Specialist, 408-755-7540